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  • Four Must Own, Highly Bullish Stocks

    In today’s up and down economy the old principle of buy and hold is slowly becoming an ancient artifact, as day traders have taken over using highly sophisticated chart patterns to reap gains. Though the basis of all investments should always begin with fundamental analysis, the variable which most believe is the prime factor driving share price, it is important to note that the major US indices (S&P 500, NASDAQ, NYSE, Dow Jones) haven’t gained a single percentage point over the last decade.

    Below we highlight some of the most bullish chart patterns around, which stand a high probability of withstanding any economic cycles that may hit the markets in the coming months.

    Boston Scientific Corporation (NYSE:BSX)

    Engaged and broken out of the infamous ‘Cup and Handle‘ breakout pattern, a very rare, yet highly profitable pattern. With a measured move to $8.80, institutions and mutual funds will be sure to pour in as the uptrend continues.

    From the chart, we notice that the 100-weekly moving average is the first resistance at $7.97, after-which the stock will be in a free flowing no resistance area all the way up to $8.80, which is also the top of the measured handle pattern.

    On the metrics side, the Relative Strength Index shows money is beginning to flow back into the stock after it reached oversold levels, the MACD divergence and slow stochastic have both engaged in bullish crosses and look to be moving higher.

    TransGlobe Energy Corp. (NASDAQ:TGA)

    If you like double bottom, bounce plays, this is the investment for you. Coming off a mild disappointment in a potential oil well that instead was filled with water, the monstrous uptrend that saw the stock gain more than 400% this past year was shattered. However, to many expert chart traders, this represents a perfect buying opportunity based on a number of technical attributes.

    Firstly, we can see that the correction finished right at the 50-day moving average of $13.70, which is normal and healthy for a pullback, especially considering the magnitutde of the uptrend. Next we can see that the Relative Strength Index (RSI) has once again gained momentum, and shows that smart money is pouring back into the stock. The slow stochastic has also reached a very oversold level and will look to base and bounce from here on out.

    Rapligen Corp. (NASDAQ:RGEN)

    For a penny stock play, you couldn’t ask for a better setup than this. The chart is currently showing the stock trading at the apex of a Ascending Triangle pattern, that could see a re-test of the 200-week moving average at $4.33, with a quick move to $4.75 should that be broken.

    The Relative Strength Index (RSI) has moved off its oversold conditions during the first half of the year, and smart money seems to be once again moving into the stock.

    Rapligen also has some upcoming catalysts that could push the stock price higher:

    • Clinical Trials for Phase 2b for RG2417 (oral formulation of uridine), expected to report top-line results during 1st quarter 2011
    • Complete Phase 3 trials for RG1068 (synthetic human secretin) for gastrointestinal or GI hormone to improve MRI imaging of pancreas, expects completion during 1st quarter 2011

    BioSante Pharmaceuticals (NASDAQ:BPAX)

    BioSante seems set to breakout based on analyzing its historical chart patterns. A move that was experienced in mid September looks poised to once again take place during the end of December to early January.

    The first indication of an uptrend starting is the Relative Strength Index (RSI) which shows that funds are once again purchasing the stock. Should a breakout occur, we have the 200-day moving average acting as overhead resistance, with a clear break to $2 beyond that. Both the MACD divergence and slow stochastic are currently enageged in bullish crosses and look to continue the upward momentum.

    BioSante also has some upcoming catalysts which could propel the share price higher:

    • Expecting announcement of GVAX (therapeutic cancer vaccine) phase 2 study to begin at Johns Hopkins center during 1Q 2011
    • Outcome of phase 3 LibiGel (testosterone gel) results to be posted during 1st half 2011, to support a potential NDA filing


    Disclosure: I am long BSX, TGA, RGEN, BPAX.
    Tags: BSX, TGA, RGEN, ANIP, NDAQ, NYC, DIA, SPY
    Dec 17 12:23 PM | Link | Comment!
  • Discovery Laboratories Gains Steam Ahead of NDA Resubmission

    Discovery Laboratories (NASDAQ:DSCO) saw its shares rise more than 8.52% on Tuesday’s trading, making it one of the highest gainers on any major exchange for the day. The excitement comes following growing anticipation that they will file a request for hearing to maintain its listing on the NASDAQ exchange sooner rather than later, as well as move one step closer to its NDA resubmission of its flagship product, Surfaxin, during 1st quarter of 2011. It is important to note that the FDA granted Discovery Labs Orphan Drug designation for Surfaxin for the treatment of RDS in premature infants, and the EMEA granted Discovery Labs Orphan Drug designation for Surfaxin for the prevention and treatment of RDS in premature infants. An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition, the condition itself being referred to as an orphan disease.

    Several sources have also indicated that a short squeeze could be taking place ahead of the pending catalyst. The company has more than 7.35 million shares short out of a total 158 million float, and of these the shorts have roughly seven days to cover.

    FDA Timeline

    Surfaxin, a synthetic peptide-containing lung surfactant, completed re-validation of Biological Activity Test (BAT) for quality control and stability in May 2010. Then, it was submitted via protocol to FDA which was a completed required preclinical program with written guidance from FDA that was received in June 2010. If approved, Surfaxin would be the first synthetic, peptide-containing surfactant for commercial use in neonatal medicine.

    Dr. Russell Clayton, Vice President, Research and Development, Preclinical and Regulatory Affairs commented, “Discovery’s plan for the potential approval of Surfaxin continues to benefit from the FDA’s direction and their recent suggestions have been incorporated into our plan. Another positive aspect of the most recent communication is the FDA’s indicated willingness to continue to interact on our approach to gain potential Surfaxin approval.”

    Positive Clinical Trials

    Surfaxin has demonstrated clinically meaningful survival and morbidity-lessening advantages versus comparator surfactants (the current standard of care) in two Phase 3 clinical trials, SELECT and STAR.

    The SELECT (Safety and Effectiveness of Lucinactant vs. Exosurf in a Clinical Trial) trial was Discovery Labs’ pivotal Phase 3 RDS prevention trial that enrolled 1294 patients. It was designed as a multinational, multi-center, randomized trial to demonstrate the safety and efficacy of Surfaxin in comparison with Exosurf, an approved, non-protein containing synthetic surfactant. Survanta, an animal-derived surfactant that is a US market leader served as a reference arm. An independent Data Safety Monitoring Board (DSMB) was responsible for monitoring the overall safety of the trial. Additionally, all key endpoints were fully adjudicated by a blinded panel of internationally recognized neonatology experts. Key results from the SELECT trial can be summarized as follows:

    • demonstrated a significant improvement in RDS related mortality profile through 14 days of life vs. Survanta (p ≤ .001) & Exosurf (p ≤ .01). 39
    • demonstrated a significant (p ≤ .01) improvement in RDS at 24 hours of life vs. Exosurf. No significant difference versus Survanta was observed. 39
    • significantly (p ≤ .05) improved survival without BPD and overall incidence of BPD vs. Exosurf. 39
    • treated infants required significantly fewer (p ≤ .05) re-intubations (insertion of endotracheal tube into the airway) vs. Survanta. 38
    • in a pharmacoeconomic assessment, demonstrated a reduction in total NICU days and patient days on ventilator vs. Survanta. 42
    • was generally safe and well tolerated. 39

    Pipeline Overview

    Discovery Labs is developing its novel, fully synthetic KL4 Surfactant platform with the intent to create a completely new therapeutic approach for the treatment of respiratory disease.

    Technical Analysis

    From a technical standpoint, if you are a penny stock investor, you couldn’t find a better setup than Discovery Laboratories which seems poised for big gains. There currently resides strong support directly underneath at $0.17, where we saw a strong bounce.Resistance begins around $0.22, after which if that is broken, we enter something dubbed by many expert traders as a “Blue Skies” breakout, or a “Vacuum Channel” due to the fact that there is little to no resistance hanging over. The next resistance would be found at the 50-day moving average of $0.37.

    Relative Strength Index (RSI) has been in a constant downtrend for the last two years, a remarkable feet on its own which is not witnessed all too often. This offers tremendous opportunities for risk seekers should a rebound occur as it seems to be finally moving towards positive territory. An RSI reading below 50 marks a very oversold stock in which money is waiting on the sidelines to jump back in.

    The bollinger bands have been in a tight channel for the last three months, with the lower portion being pierced recently, thus signalling an imminent rebound could take place. Slow stochastic further confirms the oversold conditions of the stock which are awaiting a catalyst to help spring them back to the normal average point of 50. When this takes place, as seen back in September 2009, a swift reversal could take place that sends the shares soaring.



    Disclosure: I am long DSCO.
    Tags: DSCO
    Dec 16 12:24 AM | Link | Comment!
  • Uncovering the Valuation in VIVUS

      Cinderella stories within the biotech industry are hard to come by these days, especially considering the difficulty of attaining FDA approval while attempting to maintain a steady balance of cash on hand. Dilution, false promises and hopes run rampant during the recent renewed financial crisis. There are, however,
    Cinderella stories within the bio-tech industry are hard to come by these days, especially considering the difficulty of attaining FDA approval while attempting to maintain a steady balance of cash on hand. Dilution, false promises and hopes run rampant during the recent renewed financial crisis. There are, however, success stories which seem to trump the odds, as was seen last year with Human Genome Sciences (NASDAQ:HGSI) that rose from $2.50 a share to well over $32, or who could ever forget Dendreon (NASDAQ:DNDN) who's advanced product Provenge helped propel the stock from $3.50 to a peak of $54, and last but not least, Somaxon (NASDAQ:SOMX), who's product Silenor was highly criticized by many specialists yet surprised the investment community with FDA approval and helped thrust the price from $1.50 to $9.50 in a matter of days. Taking on NutriSystem (NASDAQ:NTRI) and Medifast (NYSE:MED) will soon be the featured company, VIVUS (NASDAQ:VIVUS).

    Indeed, as seen by these examples, it takes a lot more than simple luck to be able to uncover such hidden gems. More often than not, it takes only one man's concept to initiate the initial stages of the discovery in a cure for an unmet disease, or more importantly, one company to step up to the plate and take the lead. No better company exemplifies this principle than VIVUS Inc., who has had more than its share of roadblocks along the path to reaching financial and investment stability. To understand the vast potential this company offers, you also have to be a believer in old man Buffet's old saying, "Be greedy when others are fearful, and be fearful when others are greedy."

    This article will look to uncover the highly undervalued market-cap (relative to product industry size potential), as well as draw comparisons to the other two companies competing for weight loss drugs, Arna Pharmaceuticals (NASDAQ:ARNA) and Orexigen Therapeutics (NASDAQ:OREX).

    No more than two months ago, the company received a Complete Response Letter, or CRL, from the FDA regarding the Qnexa NDA. Unfortunately, the FDA issued the CRL to communicate its decision that the NDA could not be approved in its present form. This sent shock-waves across the investment community as shares tumbled from the 52-week high of $13.68 all the way down to the 52-week low of $4.69. This enfuriated investors and a class action lawsuit followed shortly thereafter, adding fuel to the fire, which by now had turned into an inferno.

    So just how did this company gasping for air go from a fish left to die, to having FDA deputy director of Metabolism and Endocrinology, Dr. Coleman endorse the Qnexa product, along with Mr. Orloff who apparently has many ties to the FDA? Perhaps they too are interested in the drug with the best efficacy in helping Americans shed that unwanted weight, and achieve a healthy lifestyle away from obesity.

    Lawsuit Holding Price Lower

    This is perhaps the main firepower behind the driving force of the relentless 13.2 million shorts out of the total 80.5 million share float. As per the press release by Bernstein Liebhard LLP, "On July 15, 2010, the FDA Panel held a hearing to review Qnexa. Following the lengthy review and discussion, the FDA Panel voted against recommending Qnexa based on concerns regarding adverse effects and the unknown impact of long-term use beyond the 56-week clinical study period. The FDA Panel voted 10-to-6 in the negative on the question of whether the "overall risk-benefit assessment of Qnexa is favorable to support approval." When news of the vote was publicly announced on July 15, 2010, the market price of Vivus common stock plummeted, falling $6.70 per share, or 55%, in one day on unusually high trading volume of over 42.3 million shares. On October 28, 2010, the FDA followed the recommendation of the FDA Panel and rejected Vivus's NDA for Qnexa."

    Lawsuits, rejected NDA, heck, you'd think being fearful was the only option that came to mind when you heard of VIVUS, and that couldn't be further from the truth. For you see, lawsuits in this industry are common, especially with the high risks involved in biopharmaceutical companies and their low percentage of FDA approval. On average, roughly 2% of the drugs per year end up making the marketing stage after passing the IND, Phase I, Phase II and Phase III, while also pleasing the FDA panel prior to the NDA.

    FDA Resubmission Arriving Shortly

    Perhaps the most overlooked aspect of this whole situation is that no one out there has discussed the fact that the company, by December 15th, 2010, is tentatively scheduled to resubmit the FDA's requests for information included int he CRL and thus submit a written response to the FDA in order to file an NDA shortly thereafter. For teratogenicity, the FDA requested a comprehensive assessment of topiramate’s and Qnexa’s teratogenic potential. As part of the Company’s response, the Company plans to compile analyses integrating existing nonclinical and clinical data; available in published research for topiramate (currently marketed by Ortho-McNeil-Janssen Pharmaceuticals, Inc. as TOPAMAX and available generically from several manufacturers) and as generated by the Company, for Qnexa. The Company’s response will include a detailed risk management plan to mitigate any potential risks in women of childbearing potential. For cardiovascular safety, the FDA asked the Company to provide evidence that the elevation in heart rate associated with Qnexa does not increase the risk for major adverse cardiovascular events.  In the Company’s response, the Company plans to provide several new analyses to demonstrate Qnexa does not increase the risk for major cardiovascular events, which would include data from its SEQUEL (OB-305) and Sleep Apnea (OB-204) studies. The CRL also included a request for the submission of the final study report from the two-year SEQUEL (OB-305) study. SEQUEL was a 52-week extension study for a subset of 675 patients who completed the previously reported 56-week CONQUER study. The Company announced top line results from the two-year SEQUEL study on September 21, 2010, and a final study report is being prepared as part of the Company’s response. Data from the SEQUEL and Sleep Apnea studies were not included in the original NDA.

    Just imagine would happen if the NDA goes through as scheduled, the lawsuit gets dropped, followed by a drastic rise in share price due to one of the most epic short squeezes seen in a very long time. Now it certainly becomes a little more clear as to why there seems to be a lot of opportunity amongst uncertainty for VIVUS.

    Competitor: Orexigen's Obesity Drug Unlikely to be Approved

    Key Resons Orexigen's drug might fail the upcoming FDA review:

    • The not-so-encouraging news for Orexigen: Ten of 20 Contrave panel experts also reviewed Arena's lorcaserin in September. Seven of these experts voted against lorcaserin, while three voted in favor.
    • Lorcaserin was voted down because the drug's marginal ability to induce weight loss was overwhelmed by the drug's safety risks. Contrave's efficacy isn't much better than what's seen with lorcaserin, while the drug also has concerning safety questions, mainly around blood pressure and heart rate elevations.
    • Contrave's cardiovascular risk profile somewhat resembles Abbott Lab's Meridia, which was recently pulled off the market after a September advisory panel meeting. Eight of the 10 experts who will be reviewing Contrave Tuesday voted to recommend Meridia's withdrawal from the market due to the drug's cardiovascular risks. These eight experts are the people Orexigen needs to be most worried about Tuesday.

    Competitor: Arna's Poor Efficacy Highlighted by Forbes

    Robert Langtreth wrote a brief article on Arna and Orex, highlighting the lack of performance. He stated,  "Doesn’t this mean that the FDA should be rushing to approve more obesity drugs, like those from Arena or Orexigen? Not necessarily. Their drugs generally have modest weight loss over placebo and often won’t get you in the type of weight loss range that could even achieve the modest 31% death reduction, even assuming there are no side effect issues. This great difficulty in producing highly effective fat pills that don’t have big side effects is why so few obesity drugs are on the market."

     

    Pipeline

     

    http://www.vivus.com/images/stories/js_pipeline/pipeline.jpg

    Product Highlights

    Qnexa (Obesity)

     

    Product Highlights

    Qnexa (Obesity)

    Beyond its impact on health, obesity economically accounts for 9.1% of U.S. annual health care spending - nearly $150 billion dollars. By 2030, if trends in the escalating rates of obesity continue, health care costs attributable to obesity may reach $956 billion, accounting for up to 18% of total health care costs, or $1 in every $6 spent on health care.

    Key Data

    Highlights from the EQUIP and CONQUER studies include:

    -- Average weight loss of 14.7% (37 lbs) was achieved by patients treated with Qnexa for 56 weeks in the EQUIP study; -- Significant improvements in cardiovascular, metabolic and inflammatory risk factors among patients treated with Qnexa; -- FDA efficacy benchmarks for weight loss agents exceeded at all three doses of Qnexa tested in the clinical program; -- Completion rates up to 69% were significantly higher than placebo at all three doses of Qnexa, indicating favorable tolerability; and -- Favorable benefit/risk safety profile for Qnexa. -- Average weight loss for Qnexa patients completing the EQUIP study was 37 pounds and 18 pounds with full-dose Qnexa and low-dose Qnexa, respectively, as compared to 6 pounds in the placebo group; -- 60% of the full-dose Qnexa patients who completed the study lost at least 10% of their baseline weight; -- 43% of the full-dose Qnexa patients who completed the study lost at least 15% of their baseline weight; -- Completion rate for EQUIP was 47%, 57%, 59% for patients taking placebo, low-dose Qnexa and full-dose Qnexa, respectively; and -- Patients treated with full-dose Qnexa had significant improvements in blood pressure, triglycerides and cholesterol.

    Qnexa (Diabetes)

    There are 23.6 million children and adults in the United States, or 7.8% of the population, who have diabetes. While an estimated 17.9 million have been diagnosed with diabetes, unfortunately, 5.7 million people (or nearly one quarter) are unaware that they have the disease. It is estimated that there are nearly 250 million diabetics worldwide.

    Qnexa (Sleep Apnea)

    Obstructive sleep apnea (OSA) is a sleep-related breathing disorder that involves a decrease or complete halt in airflow despite an ongoing effort to breathe. It is a common yet serious disorder characterized by repeated pauses in breathing during the sleep cycle. Approximately 18 million Americans are afflicted with OSA, though an estimated 90 percent of patients remain undiagnosed or untreated. Studies have identified a causal relationship between OSA and a number of cardiovascular and metabolic diseases including hypertension, diabetes, stroke, congestive heart failure and sudden cardiac death. Patient compliance can be an issue in treating OSA and can limit the effectiveness of currently available treatments which include lifestyle changes, continuous positive airway pressure (CPAP) devices and surgery.

    Currently, there are no approved pharmacologic treatments for OSA.

    Avanafil (Erectile Dysfunction)

    In their latest press release, the company announced "Positive Results From Long-Term Phase 3 Study of Avanafil in Erectile Dysfunction".

    In the study, patients treated with avanafil who attempted sexual intercourse (SEP3) within the first 15 minutes of dosing had success rates of 80%.

    Comparison of Competitors: King of Sexuality

    Viagra vs. Cialis vs. Levitra vs. Avanafil

    Success Rate

    All three currently approved drugs (Viaga, Cialis, Levitra) work for approximately 70 percent of all men. For Avanafil, this success rate is 80%, quite a drastic improvement.

    Manufacturers:

    Viagra: Pfizer
    Cialis: Eli Lilly and ICOS
    Levitra: GlaxoSmithKline and Bayer

    We can clearly see here that a partnership or buyout is looming for its rights to the drug given its current success.

    Side Effects

    All three drugs share most of the same side effects. Some men may experience headaches, flushing, back pain, runny noses, stomach aches, or even changes in vision (example: some Viagra studies have revealed that on rare occasions a man may begin seeing a bluish tinge but that should go away after the drug has been eliminated from the body). These are all common side effects and should not be reason to worry excessively.

    Less side effects for Avanafil:

    • The most common side effects reported were headache (5.6%), flushing (3.5%), nasopharyngitis (3.4%) and nasal congestion (2.1%)
    • There were no drug-related serious adverse events reported in the study

    Fundamental Standpoint

    As per its latest 10-Q, The company currently has $175 million assets on hand, with a burn rate of about $45 million per year, thus allowing it sufficient funds to be ablet o avoid dilution prior to meeting FDA deadlines for its product pipeline.

    The company's float is 54% held by Institutional & Mutual Fund owners, thus showing a high amount of faith in its ability to meet marketing approval. Among the top holders include: Chilton Investment, Caxton Associates Vanguard Group, First Mantahhan, BlackRock Fund, and Wentworth.

    At a quick glance on options reveals a bullish story developing, as volume has been high on the December, 10, $8.00 call options, as they jumped nearly 46% with 1,335 traded on 20,686 open interest. January $9 calls have also been gaining traction. They are up 23.53% on 797 volume with 2,835 open interest, as investors seem to be serving their appetite for risk.

    Disclosure: Long VVUS

     



    Disclosure: I am Long VVUS.
    Dec 07 1:50 AM | Link | Comment!
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